The document discusses key concepts in microeconomics including scarcity, opportunity cost, comparative advantage, costs of production, determinants of demand and supply, price elasticity, and how equilibrium price and quantity are affected by shifts in supply and demand. It provides learning objectives, definitions, examples, and tables to illustrate these concepts for a principles of microeconomics course.

1. Review Principle of Micro Economics Spring 2006 Professor Rutstrom

9. Numeric example based on production possibility frontier (linear)

10. Table 1 The Production Opportunities of the Farmer and Rancher Copyright © 2004 South-Western

11. Table 2 The Gains from Trade: A Summary Copyright © 2004 South-Western

16. Figure 6 Big Bob’s Cost Curves Copyright © 2004 South-Western (b) Marginal- and Average-Cost Curves Quantity of Output (bagels per hour) Costs $3.00 2.50 2.00 1.50 1.00 0.50 0 4 2 6 8 14 12 10 MC ATC AVC AFC

20. Table 1 Variables That Influence Buyers Copyright©2004 South-Western

21. Table 2 Variables That Influence Sellers Copyright©2004 South-Western

27. Figure Linear Demand Curves Copyright©2003 Southwestern/Thomson Learning Quantity 0 Price Elasticity > 1 Elasticity = 1 Elasticity < 1 Demand

28. Figure 3 How Total Revenue Changes When Price Changes: Inelastic Demand Copyright©2003 Southwestern/Thomson Learning Quantity 0 Price Quantity 0 Price An Increase in price from $1 to $3 … … leads to an Increase in total revenue from $100 to $240 Total Revenue Increases with an Increase in Price Demand Revenue = $100 Revenue = $240 Demand $1 100 $3 80

29. Figure 4 How Total Revenue Changes When Price Changes: Elastic Demand Copyright©2003 Southwestern/Thomson Learning Quantity 0 Price Quantity 0 Price An Increase in price from $4 to $5 … … leads to an decrease in total revenue from $200 to $100 Total Revenue Decreases with an Increase in Price Demand Revenue = $200 $4 50 Demand Revenue = $100 $5 20

33. Table 4 What Happens to Price and Quantity When Supply or Demand Shifts? Copyright©2004 South-Western